April 15 might be the most stressful day of the year for business owners racing to get their taxes files—and certainly for accountants racing to make hundreds or even thousands of clients happy.
Once the madness of Tax Day subsides, however, most of us put the thought of W-2s and 1099s and deductible expenses far out of sight and even farther out of mind. This makes sense—after those Form 1040s are finally shipped off to the IRS, everyone deserves to celebrate (or mourn, depending on their tax liability).
But just because Tax Day is over doesn’t mean you should neglect your particular situation until next spring when the stressful cycle starts all over again. This year, be proactive and get a head start on next year’s taxes by following these Q2 preparation tips:
1) Stay organized. Keeping track of retirement contributions, deductible expenses, and charitable donations is much easier with a clean early-year slate. Start a filing system now and stick to it throughout the year to make life less chaotic next spring.
2) Assess your withholding levels. Did you get a big tax refund in 2014? You’re likely having too much withheld—essentially lending the government interest-fee money throughout the year. If so, fill out a new W4 and increase the number of exemptions you claim. Did you owe the IRS extra above and beyond what was withheld from your paycheck? Decrease the number of exemptions you claim so the same scenario won’t repeat itself next year.
3) Get your health insurance house in order. The uncertainty surrounding the Affordable Care Act continues—especially now that everyone is anxiously waiting to see how it will actually perform. In February, the employer mandate was delayed again until 2016 for medium-sized businesses (50 to 99 workers). And companies with more than 100 employees are required to offer only 70% of their full-time workers coverage in 2015 instead of 95%. But the individual penalty for non-coverage—1% of yearly household income or $95 per person—is definitely in effect in 2014. Don’t wait any longer to develop a plan of action to secure health insurance for yourself and your employees.
4) Consider making home or business improvements. Whether it’s energy upgrades or technology investments, many improvements completed this year can yield lucrative tax breaks. (We all have our fingers crossed that the Senate will raise the maximum amount of depreciation allowed under IRS Code Section 179 from $25,000 back to $500,000, where it was from 2010-2013.) Beyond the tax benefit, investing in your home or business is a smart way to spend money.
5) Work with your financial advisor to make investments more tax-efficient. Paying close attention to the types of investments in tax-deferred or tax-heavy accounts can mean the difference between owing thousands of dollars and getting a hefty refund the next Tax Day. Talk to your financial advisor soon (after they go on vacation, of course) to get a money-saving plan in place now.
*Information dispensed in this QuickTip is for illustrative purposes only and accuracy is not guaranteed. CMIT Solutions and its owners, affiliates, and partners are not tax advisors, and no communications are intended to offer any definitive tax advice. Please consult with qualified tax professionals concerning your situation.